County of Sonoma v. Federal Housing Finance Agency

The Federal Housing Finance Agency (FHFA), the regulator and conservator of Freddie Mac and Fannie Mae, issued a directive preventing Freddie Mac and Fannie Mae from purchasing mortgages for properties encumbered by liens created by property-assessed clean energy (PACE) programs. FHFA indicated, among other things, that the first liens of the PACE programs could disrupt the housing market and that there was a lack of underwriting standards to protect homeowners and an absence of energy-saving standards to allow for the valuation of home improvements. Plaintiffs alleged that FHFA must issue a regulation to implement this directive. The district court ruled against FHFA and required completion of notice-and-comment rulemaking. On appeal, the Ninth Circuit dismissed the action, ruling that FHFA’s directive was a lawful exercise of its statutory authority as conservator, and that the courts therefore lacked jurisdiction.